{ "id": 8571504, "name": "IN THE MATTER OF: THE TRUSTEESHIP OF SARAH GRAHAM KENAN. IN RE: PETITION TO THE RESIDENT JUDGE OF THE FIFTH JUDICIAL DISTRICT (Pursuant to Chap. 111, P.L. 1963). and IN THE MATTER OF: THE TRUSTEESHIP OF SARAH GRAHAM KENAN. IN RE: PETITION TO THE RESIDENT JUDGE OF THE FIFTH JUDICIAL DISTRICT (Pursuant to Ch. 112, P.L. 1963). and IN THE MATTER OF: THE TRUSTEESHIP OF SARAH GRAHAM KENAN. IN RE: PETITION TO THE RESIDENT JUDGE OF THE FIFTH JUDICIAL DISTRICT (Pursuant to Chap. 113, P.L. 1963)", "name_abbreviation": "In re the Trusteeship of Kenan", "decision_date": "1964-01-17", "docket_number": "", "first_page": "1", "last_page": "17", "citations": [ { "type": "official", "cite": "261 N.C. 1" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "194 A. 2d 309", "category": "reporters:state_regional", "reporter": "A.2d", "opinion_index": 0 }, { "cite": "233 N.C. 1", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8596672 ], "pin_cites": [ { "page": "62" } ], "opinion_index": 0, "case_paths": [ "/nc/233/0001-01" ] }, { "cite": "260 N.C. 1", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8572893 ], "opinion_index": 0, "case_paths": [ "/nc/260/0001-01" ] }, { "cite": "105 S.E. 2d 421", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "249 N.C. 141", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8610731 ], "opinion_index": 0, "case_paths": [ "/nc/249/0141-01" ] }, { "cite": "8 Harv. L. Rev. 472", "category": "journals:journal", "reporter": "Harv. L. Rev.", "year": 1894, "opinion_index": 0 }, { "cite": "160 A.L.R. 1435", "category": "reporters:specialty", "reporter": "A.L.R.", "opinion_index": 0 }, { "cite": "59 A.L.R. 653", "category": "reporters:specialty", "reporter": "A.L.R.", "opinion_index": 0 }, { "cite": "34 L.R.A. 297", "category": "reporters:federal", "reporter": "L.R.A.", "opinion_index": 0 }, { "cite": "53 N.J. Eq. 151", "category": "reporters:state", "reporter": "N.J. Eq.", "case_ids": [ 107915 ], "opinion_index": 0, "case_paths": [ "/nj-eq/53/0151-01" ] }, { "cite": "62 N.E. 2d 205", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "8 N.W. 2d 576", "category": "reporters:state_regional", "reporter": "N.W.2d", "opinion_index": 0 }, { "cite": "115 P. 2d 805", "category": "reporters:state_regional", "reporter": "P.2d", "opinion_index": 0 }, { "cite": "124 N.E. 727", "category": "reporters:state_regional", "reporter": "N.E.", "opinion_index": 0 }, { "cite": "227 N.Y. 145", "category": "reporters:state", "reporter": "N.Y.", "case_ids": [ 1963676 ], "opinion_index": 0, "case_paths": [ "/ny/227/0145-01" ] }, { "cite": "162 N.E. 471", "category": "reporters:state_regional", "reporter": "N.E.", "opinion_index": 0 }, { "cite": "224 N.Y.S. 30", "category": "reporters:state", "reporter": "N.Y.S.", "opinion_index": 0 }, { "cite": "144 S.W. 2d 761", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "4 N.C. 442", "category": "reporters:state", "reporter": "N.C.", "opinion_index": 0 }, { "cite": "89 S.E. 2d 144", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "242 N.C. 584", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8619395 ], "opinion_index": 0, "case_paths": [ "/nc/242/0584-01" ] }, { "cite": "127 S.E. 2d 762", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "258 N.C. 23", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8559300 ], "opinion_index": 0, "case_paths": [ "/nc/258/0023-01" ] }, { "cite": "139 N.C. 283", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8652459 ], "opinion_index": 0, "case_paths": [ "/nc/139/0283-01" ] }, { "cite": "40 S.E. 2d 600", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "226 N.C. 750", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8625343 ], "opinion_index": 0, "case_paths": [ "/nc/226/0750-01" ] }, { "cite": "84 S.E. 2d 386", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "241 N.C. 103", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8602766 ], "opinion_index": 0, "case_paths": [ "/nc/241/0103-01" ] }, { "cite": "110 A. 615", "category": "reporters:state_regional", "reporter": "A.", "opinion_index": 0 }, { "cite": "119 N.C. 359", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8655055 ], "opinion_index": 0, "case_paths": [ "/nc/119/0359-01" ] }, { "cite": "39 N.C. 231", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2100099 ], "opinion_index": 0, "case_paths": [ "/nc/39/0231-01" ] }, { "cite": "25 N.C. 389", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8693944 ], "opinion_index": 0, "case_paths": [ "/nc/25/0389-01" ] }, { "cite": "77 N.C. 193", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8682346 ], "opinion_index": 0, "case_paths": [ "/nc/77/0193-01" ] }, { "cite": "1 N.C. 5", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 12134632, 12121236 ], "opinion_index": 0, "case_paths": [ "/nc/1/0005-01", "/nc/1/0005-01" ] }, { "cite": "7 S.E. 2d 354", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "217 N.C. 209", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8602829 ], "opinion_index": 0, "case_paths": [ "/nc/217/0209-01" ] }, { "cite": "80 S.E. 2d 625", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "239 N.C. 575", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8627896 ], "opinion_index": 0, "case_paths": [ "/nc/239/0575-01" ] }, { "cite": "43 S.E. 2d 73", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "227 N.C. 708", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8627678 ], "opinion_index": 0, "case_paths": [ "/nc/227/0708-01" ] }, { "cite": "107 S.E. 2d 631", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 1 }, { "cite": "249 N.C. 658", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8621173 ], "opinion_index": 1, "case_paths": [ "/nc/249/0658-01" ] }, { "cite": "19 S.E. 2d 237", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 1 }, { "cite": "221 N.C. 124", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8626392 ], "opinion_index": 1, "case_paths": [ "/nc/221/0124-01" ] }, { "cite": "72 S.E. 311", "category": "reporters:state_regional", "reporter": "S.E.", "opinion_index": 1 }, { "cite": "156 N.C. 246", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 11270889 ], "opinion_index": 1, "case_paths": [ "/nc/156/0246-01" ] }, { "cite": "75 S.E. 2d 398", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 1 }, { "cite": "237 N.C. 487", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8614411 ], "opinion_index": 1, "case_paths": [ "/nc/237/0487-01" ] }, { "cite": "72 S.E. 2d 54", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 1 }, { "cite": "236 N.C. 19", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8622191 ], "opinion_index": 1, "case_paths": [ "/nc/236/0019-01" ] }, { "cite": "105 S.E. 2d 421", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 1 }, { "cite": "249 N.C. 141", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8610731 ], "opinion_index": 1, "case_paths": [ "/nc/249/0141-01" ] } ], "analysis": { "cardinality": 1638, "char_count": 41754, "ocr_confidence": 0.378, "pagerank": { "raw": 1.172288901962113e-07, "percentile": 0.5866998423460209 }, "sha256": "f83d7878f057218c70427032e013a66ed8edea7c36d6d04688a36fa2279dbf08", "simhash": "1:27b527406e9f6257", "word_count": 7065 }, "last_updated": "2023-07-14T21:53:45.776989+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "PARKER and ShaRp, JJ., join in dissenting opinion." ], "parties": [ "IN THE MATTER OF: THE TRUSTEESHIP OF SARAH GRAHAM KENAN. IN RE: PETITION TO THE RESIDENT JUDGE OF THE FIFTH JUDICIAL DISTRICT (Pursuant to Chap. 111, P.L. 1963). and IN THE MATTER OF: THE TRUSTEESHIP OF SARAH GRAHAM KENAN. IN RE: PETITION TO THE RESIDENT JUDGE OF THE FIFTH JUDICIAL DISTRICT (Pursuant to Ch. 112, P.L. 1963). and IN THE MATTER OF: THE TRUSTEESHIP OF SARAH GRAHAM KENAN. IN RE: PETITION TO THE RESIDENT JUDGE OF THE FIFTH JUDICIAL DISTRICT (Pursuant to Chap. 113, P.L. 1963)." ], "opinions": [ { "text": "Rodman, J.\nThe appeals of Murchison \u00a1and Burney \u00a1ais guardians ad litem are directed to the orders entered in each proceeding. The appeal of MacManniis \u00a1and Kenan as trustees is directed to\u00a1 the validity of the order entered in -the proceeding seeking permission to give away Mrs. Kenan\u2019s right to receive for her life the income from the trust \u00a1created by her.\nDefendant Murchison, appointed by the court to protect Mrs. Kenan\u2019s rights, challenges both the right of the trustee to -make and the power of the Legislature or the court to authorize 'the proposed gifts.\nThe question for decision then is: Do-the facts found, standing alone, suffice to sustain the order? The \u00a1answer must, we think, be in the negative.\nOurs .is \u00a1a constitutional form oif government. \u201cIt is .axiomatic under our system \u00a1of government that the Constitution within its compass is \u00a1supreme as the established' expression of the will and purpose of the people. Its provisions must be observed \u00a1by all.\u201d In re Advisory Opinion House Bill 65, 227 N.C. 708, 43 S.E. 2d 73.\nAny governmental act which \u00a1overrides the restrictions declared in \u00a1our Constitution or which \u00a1thwarts the powers granted to the United States is void. S. v. Felton, 239 N.C. 575, 80 S.E. 2d 625; Freeman v. Comrs. of Madison, 217 N.C. 209, 7 S.E. 2d 354; Bayard v. Singleton, 1 N.C. 5.\nSeic. 17, Art. I, of p-m^Oonrtitikion, imposes this limitation -on govern-, mental .auttlToriby:: \u201cNo person \u00a1ought .to. be . . . disseized of bis freehold ... or in any manner deprived of . . . ills property, but by the law of the land.\u201d This limitation on governmental authority hais been in force moe the adoption of our first Constitution in 1776. See sec. 12 of .that Constitution.\nIt is a matter of common knowledge .that North Carolina delayed ratification of the Constitution of the United States until Congress bad submitted to the States -amendments guaranteeing fundamental right\u00ae. Among the amendments -so submitted was .the Fifth, declaring: \u201cNo person \u00e1iali . . . be deprived of . . . property, without due process of law; nor .sinail padvate property be taken for public use without just compensation.\u201d The Fourteenth Amendment to- the Constitution of the United States isays: \u201cNo state . . . shall . . . deprive any person of life, liberty, or property, without due process of law; nor deny to any person \u00a1within its jurisdiction the equal protection of the laws.\u201d These constitutional limitations .are not .confined to- the Legislature. They are applicable to courts and to- the -executive 'branch of \u00a1the government. It is immaterial, therefore, whether a \u00a1court of equity has the authority, without legislative sanction, to authorize the use of 'an incompetent\u2019s income or the principal of -his estate for a purpose other \u00a1than -his own support \u00a1and the discharge of his legal -obligations. Blake v. Respass, 77 N.C. 193, or whether the right to so direct is dependent upon legislative authority. Brooks v. Brooks, 25 N.C. 389; In the Matter of Latham, 39 N.C. 231; In re Hybart, 119 N.C. 359; Binney v. R. I. Hospital Trust Co., 110 A. 615.\nIt scarcely need be said that the constitutional limitation against taking of property of a citizen affords -the same protection to -a lunatic that it .affords \u00a1to- a person of \u00a1sound mind.\nTire Legislature cannot sanction the taking of one\u2019s property unleisis (-a) in satisfaction of -a legal obligation, or ( the two young ladies mentioned in- the petition, and supported them as members oif his family and sent them to a boarding school; where one of them completed her* education 'and has again returned and become a member of Iris family, leaving the other still at school. I have no doubt, therefore, that if Mr. Heeney had retained the full possession of his faculties he would have continued to 'support them in the same way while .they remained unmarried. I shall therefore but carry out bis undoubted intentions, by directing the committee ho let these two young ladies remain in the family and be supported as they have heretofore been, until their marriage, or the death of the lunatic, or the further order of the court.\u201d\nIn a later New York case, In re Flagler, 224 N.Y.S. 30, a second cousin of Mrs. Flagler (the incompetent) sougjbt an. allowance from the surplus income. The court said: \u201cIn granting application\u00ae of this character 'the .court is not actuated by any supposed interest which the applicant may have in the property of the incompetent. Relief may be tad upon the principle -that tihe court will acst iwitlb reference to \u00a1the lunatic amid for ibis 'benefit ais it ils probable that he would have acted for himself, i-f he were of sound mind.\u201d The 'order there approved was reviewed by the New York Count of Appeals, Re Flagler, 162 N.E. 471. That 'Court said: \u201cIf Mrs. Flagler today could decide upon, the disposition o,f itLhe irnoome of her great estate, moral or charitable considerations would dictate her decision only to the extent that islhe felt their force. Her -great 'affluence might impel -her to .relieve the distress of her cousin; -the -law would not compel\u00ed her -to- do so- if she decided otherwise. The power of the court ,to dispose of her income is mot plenary. The court may mot be moved by its own' generous impulses in the disposition- of the income of ithe incompetent. In reaching 'decision it may give moral or charitable consider,1 ations -only such weight a\u00a9 it finds that the incompetent herself would have -given to them. Allowances for the support -of collateral relatives of the incompetent have been made \u2018upon the theory that the lunatic would, in all probability, have made such payments if he had been of sound mind.\u2019 Re Lord, 227 N.Y. 145, 124 N.E. 727. The appellate'division correctly held that-the allowance made at special term may .be justified upon no other theory.\u201d See also In re Hudleson\u2019s Estate, 115 P. 2d 805; In re Brice Guardianship, 8 N.W. 2d 576; Re Beilstein, 62 N.E. 2d 205; Potter v. Berry, 53 N.J. Eq. 151; and the annotations in 34 L.R.A. 297, 59 A.L.R. 653, and 160 A.L.R. 1435.\nA summary of the English .and Irish oases dealing with the right of \u25a0a 'court of equity to use an incompetent\u2019s estate other than for his own maintenance .and the maintenance and support of his dependants may be found in an article entitled \u201cThe \u00a1Surplus Income -of a Lunatic,\u201d 8 Harv. L. Rev. 472 (1894-95).\nThe power -and limitation on the power of a court of -equity to authorize a fiduciary with respect to the use or other handling -of the estate entrusted to him is illustrated in- two recent decisions of this Court.\nIn Ford v. Bank, 249 N.C. 141, 105 S.E. 2d 421, .adult children of an 'incompetent sought permission to use a part of his estate to purchase a home. We said: \u201cNo one can doubt that financial .assistance would ibe of benefit to the children of the incompetent occupying \u00a1the economic status in life depicted by the -evidence and the findings \u00a1of fact. If their father were mentally competent, would he not .aid them? If so, the court has the authority to use his money for that purpose.\u201d\nIn Cocke v. Duke University, 260 N.C. 1, we denied authority to invest -trust funds in securities not sanctioned by the trust agreement. As the basis for the denial, we quoted with approval the. language of Carter v. Kempton, 233 N.C. 1, 62. S.E. 2d 713: \u201cIt is not tibe province \u25a0of the courts to substitute their judgment or 'the wishes of the beneficiaries for rtlhe judgment and wishes of -the testator.\u201d\nAfter oral argument 'appellees, with our permission, filed a supplemental brief .which contained a copy of the opinion of the chancery court of the state of Delaware in the case of In re Dupont, 194 A. 2d 309. There the 'chancellor as the basis of his oirder 'authorizing large gifts from the incompetent\u2019s estate, said: \u201cThe guardians have offered substantial and convincing proof that the ward in fact intended to make such distributions prior to his incompetency.\u201d\nRelating to the question of what Mrs. Kenan would do if competent, the court -found in the proceedings relating to gifts from 'income and principal:\n\u201cIn the absence of tax deductible gifts, income retained by Sarah Graham Kenan would be depleted in excess of 85% by State iand Federal income taxes and any balance thereof remaining in her estate at her death would be depleted in excess of 75% by death taxes; so that, even in the absence of current expenditure by the general trustee, less than 4% of the income received by Sarah Graham Kenan would remain to' be transmitted to her legatees, heirs or next of kin upon her death . . . .\u201d\n\u201cPetitioner herein, 'trustee of the estate and person of Sarah Graham Kenan, has concluded that it is wise 'and provident, and consistent with the desires of Sarah Graham Kenan (if she were competent) to- make the .gifts herein authorized 'and directed.\u201d\n\u201cIt is proper in the exercise of sound judicial discretion, if not mandatory under the provisions of Chapter 111 of the 1963 Session Laws of North Carolina, to> approve such declaration and gifts . . .\u201d\nBased on his findings of fact the court concluded as a matter of law:\n\u201cConsidering the situation of Sarah Graham Kenan and her estate, it is in no way detrimental to Sarah Graham Kenan, as a practical matter, but rather it is wise and provident for the petitioner to' malee the gifts herein authorized and directed.\n\u201cIt is reasonable to assume that if Sarah Graham Kenan were competent and heeding sound- advice, she would make these or similar gifts.\n\u201cIt is proper in the exercise of sound judicial discretion, if not mandatory under the provisions- of Chapter 111 of the 1963 Session Lews of North Carolina, to-.approve these gifts'.\u201d . .\nIn the proceeding relating to the surrender o\u00ed life income reserved in the trust, the 'Court found:\n\u201cThe Petitioner herein, trustee of the estate \u00a1and person of Sarah Graham Kenan, has 'concluded that, for the total net benefit of Sarah Graham Kenan land the natural objects of her bounty, it is wise and provident to declare the trust irrevocable and to make gifts of the life income to the donees named in paragraphs 30 and 31 above.\u201d\nBased on its factual findings the court concluded as a matter of law:\n\u201cConsidering the situation of 'Sarah Graham Keoan 'and her estate, it is m no way detrimental to Sarah Graham Kenan, and from the standpoint of total net benefit to her and the natural obj ects of her bounty, it is wise and provident for .the Petitioner to declare the 1956 trust agreement irrevocable and to make gifts of the life income to the donees specified in the Order herein. Indeed, it would be improvident not to' dp so.\n\u201cIt is reasonable to assume that if Sarah Graham Kenan were competent and heeding sound advice, she would declare the 1956 trust agreement irrevocable and make these or similar gifts, in view of the amount of 'the estate involved.\n\u201cIt is proper in the exercise of \u00a1sound judicial discretion, if not mandatory under the provisions of Chapter 113 oif the 1963 Session Laws of North Carolina, to approve \u00a1such declaration and gifts . .\nThe language in which the court phrases its findings of facts 'and its legal conclusions is, we think, significant. They 'amount only to' this: The coat to Mrs. Kenan of making -the gifts is, when considered- with the size \u00a1of her income and the principal of her estate, insignificant; and the \u00a1trustee, not Mrs. Kenan or the court, hais 'concluded that it is wise and consistent with the desires of Sarah Graham Kenan, if she were competent. The legal conclusion that it is reasonable to assume that Mrs. Kenan, if competent, \u201cand heeding sound \u00a1advice,\u201d would make the gifts is not supported by the findings of fact. If it be said that although (stated as a conclusion of law this is -in reality \u00a1a finding of fact, we find no evidence to support such a finding.\nMr. MacMaimis, selected by Mrs. Kenan as one of .the trustees of the trust created by her in December 1956, has acted as financial ad-visor and accountant for Mrs. Kenan, her brother, Mr. William R. Kenan, another 'trustee appointed by Mrs. Kenan, and her sister, Mrs. Wise, for many years. He testified: \u2022\n\u201cI did state that I met Mrs. Kenan at least ornee a year, to go over (her \u00bfme\u00f3me tax returns and have her sign them, land that she and I discussed these returns, .and that she was fully aware of the impact of the taxes .... She was .aware that her income was being taxed 87% -or 89% for the last ten or fifteen years. That is the fiat percentage .applied to her entire taxable income .... I have discussed with Mrs. Kenan .and she was -aware -of -tlhe fact that her ikucome was -being taxed .at clo-se to or perhaps slightly over 90% each year, and that if gifts were -made to 'Charity, which were deductible on the return, -the out-oif-pocket expense to. Mrs. Kenan f-or making those gifts would ibe about 10% of the amount of the \u2022gift, within the applicable limits of deductibility.\u201d\nJohn L. Gray, Jr., -a member of the firm of Dewey, Bailantime, Bush-by, Palmer & Wood, ia -prominent law firm in New York City, for many yeans -represented land advised Mrs. Kenan with respect to> legal matters. Mr. Gray specialized \u201cin tire field of estate -and -trust work \u2018and taxation 'as it relates to those fields-.\u201d He drafted Mrs. Kenan\u2019s wills. He \u2019drafted for her the trust 'created in 1956. He did this after consultation with Mrs. Kenan\u2019s 'brother, Mr. William R. Kenan, well informed with respect to financial problems -and a generous benefactor of educational and 'Charitable institutions in North Carolina.\nThere is nothing in the record to- -contradict the testimony of Mr. MacMannis that Mrs. Kenan was well aware of the impact of federal taxes on her income -and her estate. Fully informed ats \u00a9he was, her gifts to charity were $8,160 in each of -the yeans 1958, 1959, 1960, and 1961, and in 1962, the year in which \u00bfhe was adjudged incompetent, $8,360. These charitable .gifts she had been accustomed to' make for many years. After Mrs. Kenan was adjudged incompetent, the -trustee filed his petition with and was authorized by the count by order dated 26 November 1962 to continue to make these charitable -gifts. The largest single .gift which Mr. MacMannis could recollect Mrs. Kenan making in -the past 'twenty-(five or thirty years was\u2019a gift of $25,000.\nThe orders, hased as they -are, either on a misapprehension of the power of the Legislature -or upon findings not supported by -any evidence, are erroneous and must be vacated.\nIn view of the conclusion we reach on the fundamental question raised by 'appellants, we deem it unnecessary to lengthen- -this opinion by -discussing the other -assignments of error.\nPetitioner may, if he elects, obtain permission to amend his petitions to allege that the authority which he seeks is something which Mrs. Kenan would do, if competent..If permission to- amend is allowed, petitioner may then offer evidence to establish 'the truth of his 'allegations.\nThe -order -in each proceeding is\nReversed.", "type": "majority", "author": "Rodman, J." }, { "text": "Higgins, J.,\ndissenting: The record in this proceeding is voluminous. Time does not permit me to do more than record -a few of the reasons why I icarn not concur in (the opinion. The fundamental error, I think, is the 'assumption that these proceedings authorize ia taking of property. If the beneficiaries of the gifts had brought this action to force the making of the gifts, the opinion would be sound. What the opinion/ /says, however, is that the owner, acting through her trustee and with the approval of the court /under legislative authority, cannot voluntarily make the gifts. The statutes discussed in the opinion ('Chapters 111, 112 and 113, Session Laws of 1963) do not require or compel the trustee to do anything. They are permissive only. Before ithe -trustee may exercise any of the powers conferred, the court must make critical findings of fact and 'tiren approve.\nUntil now this Count has not undertaken to say \u00a1the North Carolina General Assembly may not pass laws regulating the disposition of property by deed, by will, by inheritance, by distribution, even by escheat. Neither has its power been doubted to- provide for the appointment of -guandians, administrators, receivers, \u00a1and trustees, and prescribe their duties. Ford v. Bank, 249 N.C. 141, 105 S.E. 2d 421. This Court has no power to legislate. \u201cIt is our duty -to interpret and apply -the law a\u00a9 it is written, but it is the function -and prerogative of the Legislature to- make the law.\u201d State v. Scoggins, 236 N.C. 19, 72 S.E. 2d 54. \u201cWhether a statute produces a just or an unjust result is a matter for the legislators and not for judges.\u201d Deaton v. Deaton, 237 N.C. 487, 75 S.E. 2d 398. \u201cNor -are w-e the judges of the wisdom or im-policy of the law. It is enough that the General Assembly has spoken on the subject. Wells v. Wells, 156 N.C. 246, 72 S.E. 311. The defendant (complains both at the law -and at the insistence of the plaintiff\u00ae, but these are matters belonging not to the courts.\u201d Cooper v. Cooper, 221 N.C. 124, 19 S.E. 2d 237. \u201cOutside the power -granted to the Federal Government, the power \u00a1of the Legislature \u00a1of North Carolina to enact statutes is without limit, except ais restrained by the Constitution of North Carolina.\u201d Milk Commission v. Galloway, 249 N.C. 658, 107 S.E. 2d 631.\nIn so .far as I have been able to. discover, not >a single case cited in support of the Court1-s decision involved legislative .authority comparable to Chapters 111, 112, 113, Session Laws of 1963. The enactments \u25a0are prelsumed to be valid until 'the contrary appears beyond a reasonable doubt. \u201c. . . (T)ibe presumption.1 is in favor of constitutionality land .a statute will not be declared unconstitutional unless the condu-isioa is so clear that no- reasonable doubt can arise.\u201d Strong\u2019s North Carolina Index, Constitutional Law, \u00a7 10, Yol. 1, and supplement thereto', citing 25 cases.\nIn the hearing before the trial judge, all conceivable interests adverse to the petitioner\u2019s request were represented. Near relatives who are sui juris joined with the petitioner 'in recommending .the court\u2019s approval. After hearing, the trial court concluded with respect to the gifts from income:\n\u201c21. Considering .the situation nf Sarah Graham Kenan and her estate, it is -in no way detrimental to Sarah \u2018Graham Kenan, ais a practical matter, but rather it is wise and provident for the petitioner to. make the gifts herein authorized and directed.\u201d\nWith respect to the gifts from the corpus of the estate, the court concluded:\n\u201c16. Considering the situation of Sarah Graham Kenan and 'her estate, it is in no way detrimental to Sarah Graham Kenan, as a practical matter, but rather it is- -wise and provident for the petitioner to make the gift herein authorized and directed.\u201d\nWith respect to the trust, the court concluded:\n\u201c9. This reduction in taxes will be greatly in excess of the amount of trust income remaining to. be transmitted to her legatees, heirs, .or next of kin in the absence of such declaration and gifts. It is, therefore, to the general, over-ail financial advantage of the legatees, heirs and next of kin of Sarah Graham Kenan that .the declaration and gifts be made, and in no way detrimental to the incompetent, as a practical matter.\u201d\n* #\n\u201c31. That the relief sought by the Petitioner herein is consistent with sound estate planning and is in keeping with the action which might be reasonably expected of a competent person .acting upon advice of qualified advisors experienced in such matters.\u201d\nSarah Graham Kenan 'is 87 years of age. She has ho lineal descendants, no. dependents, no. debts. She has been- adjudged incompetent. The jury has found .that condition will continue. The corpus of her estate is worth more than eighty million dollars. The annual income exceeds three million dollars. Why may not the. Legislature \u00e1u-ifcbarize \u2019her .trustee, .with fihe approval of the \u00a9aunt after full bearing, to dio that wihiclh a compatepfc owner similarly situated may, should, and usually does do; that is, plain .and prepare far the day when the waist estate shall pass to 'other bands? \u25a0\nThe records of this and other courts are -replete with eases setting up trusts and making contributions to. foundations, educational .institutions, churches, .and other charities. The.trustee seeks to follow these sound 'business practices, but the Court say\u00ae this is taking private property. To my single-track mind the only thing taken is 'the right of the trustee, .acting for 'his beneficiary, to do with this vast estate what the General Assembly oif North Carolina -authorized him to do. The relatives in .this public .spirited family who are sui juris appear to have joined in. the trustee\u2019s requests. The authority to follow the plan has been -authorized -by 170 of the people\u2019s representatives in session on Halifax Street. It .is now set aside by a majority of the seven on Morgan.\nThis decision will haunt us. I vote to affirm.\nPARKER and ShaRp, JJ., join in dissenting opinion.", "type": "dissent", "author": "Higgins, J.," } ], "attorneys": [ "John T.. Manning and Poisson, Marshall, Barnhill -& Williams by Alan A. Marshall for 'petitioner appellee.", "Hogue and Hill by C. D. Iiogue, Jr. for A. B. MacMannis and William B. Kenan, Jr., trustees under a revocable tmst agreement dated December 26, 1956, appellants.", "Wallace C. Murchison and Louis A. Burney, guardians ad litem, appellants." ], "corrections": "", "head_matter": "IN THE MATTER OF: THE TRUSTEESHIP OF SARAH GRAHAM KENAN. IN RE: PETITION TO THE RESIDENT JUDGE OF THE FIFTH JUDICIAL DISTRICT (Pursuant to Chap. 111, P.L. 1963). and IN THE MATTER OF: THE TRUSTEESHIP OF SARAH GRAHAM KENAN. IN RE: PETITION TO THE RESIDENT JUDGE OF THE FIFTH JUDICIAL DISTRICT (Pursuant to Ch. 112, P.L. 1963). and IN THE MATTER OF: THE TRUSTEESHIP OF SARAH GRAHAM KENAN. IN RE: PETITION TO THE RESIDENT JUDGE OF THE FIFTH JUDICIAL DISTRICT (Pursuant to Chap. 113, P.L. 1963).\n(Filed 17 January 1964.)\n1. Constitutional Law \u00a7\u00a7 2, 6\u2014\nWithin its compass the Constitution, is supreme and any governmental act which violates its mandates or which .thwarts the poweir granted to \u2022the United States is void.\n2. Constitutional Law \u00a7 23\u2014\nThe constitutional prohibitions against the taking of private property without due process of law limits the powers of -the executive and judicial branches 'as well as the legislative branch, and protects incompetents equally with persons of sound mind. Constitution of North Carolina, Art. I, \u00a7 17; Fifth and Fourteenth Amendments to .the Constitution of the United States.\n3. Same\u2014\nThe constitutional prohibitions against the 'taking of private property except by due process of law preclude the Legislature from sanctioning .the taking of a person\u2019s property except in satisfaction of a legal obligation or for a public purpose upon the payment of just compensation.\n4. Same; Insane Persons \u00a7 4\u2014\nA count of equity may not, either in the exercise of its inherent jurisdiction or with legislative samction (G-..S. 35-29.1, .4, .5, .10, .11, .16), authorize the taking of income o.r corpus of the estate of an incompetent for a purpose other than the incompetent\u2019s own support and the discharge of the incompetent\u2019s legal obligations.\n5. Same\u2014 Court may sanction gift to charity by trustee of incompetent\nonly upon finding that incompetent, if sane, would make such gift.\nA court of equity may not authorize the fiduciary of an incompetent to make gifts to charity either from the income or the corpus of the incompetent\u2019s .estate when such gifts are based upon the fiduciary\u2019s sense of moral fitness or judgment in the proper management of the estate in view .of the rate .of income tax paid by the estate or the difference between the rate .of gift and inheritance taxes, since such order would amount to a .taking of property in derogation of the incompetent\u2019s constitutional rights, but the court may authorize the fiduciary to make gifits to charity only on a finding .based upon the preponderance of the evidence at a hearing duly had after notice -that the incompetent, if then of sound mind, would make such gifts.\n6. Same; Appeal and Error \u00a7 49\u2014\nWhere upon the hearing by a count of equity of a fiduciary\u2019s application for authority to make charitable gift\u00ae from the estate of his- incompetent, \u25a0there is no evidence that the incompetent, if sane, would make such gifts, iordar authorizing the fiduciary to make such gifts, must be reversed, since such order must be predicated upon a finding based on evidence that the incompetent, if sane, would have made such gifts.\nHiggins, J., dissenting.\nParker and Sharp, JJ., join in dissent.\nAppeals by W. C. Murchison and Louis A. Burney as guardians ad litem and iby W. R. Kenan, Jr. and A. R. MacMannis as trustees from Mintz, J., June 1963 Ciwil Session of New HaNOveR.\nSarah Graham Kenan (hereafter Mrs. Kenan), a resident of New Hanower Ooumty was, in- M'ay 1962, found by a jury to. be \u201cphysically iand mentally incompetent from want of understanding to manage her \u25a0affairs 'by reason of [physical and mental weakness on account of old age, disease or other like infirmities.\u201d Based on this finding the clerk of the Superior Oourt adjudged her incompetent and, as authorized by G.S. 35-2, 'appointed her nephew, Frank H. Kenan, \u00abas trustee \u201cto control and \u00a1handle .the person, and entire estate o\u00ed. Sarah Graham Kenan wheresoever located.\u201d\nIn March 1963 the Legislature enacted three statutes, c. Ill, 112, and 113, S. L. 1963, codified a\u00ae G.S. 35-29.1 \u2014 29.4, 29.5 \u2014 29.10, and 29.11 \u2014 29.16. These statutes authorize a guardian or trustee of an incompetent with the approval of the resident judge of the Superior Oourt to make gifts for religious, charitable, or educational purposes. 0. Ill permits gifts to be made from income, c. 112, from principal, and o. 113 permits the trustee to surrender the right to revoke a trust created by the incompetent and make a gift of the reserved -life estate.\nIn May 1963 Frank H. Kenan as trustee of Mrs. Kenan filed three petitions with the 'clerk of the Superior Oourt. In -the first he sought authority to make gifts aggregating $731,600 .from the income of his ward, in the second, a gift of $100,000 from the principal, and in the third, authority to surrender the right reserved by incompetent to revoke a trust created by her in 1956 and to donate to designated institutions the income reserved for her life.\nSummarized, the petitions allege: Mrs. Kenan is and was in 1962 a resident of New Hanover Oounty. She was there adjudged incompetent. Petitioner was appointed a:s trustee of her person and estate. It is improbable that she will hereafter have mental capacity to manage her affairs. She is a widow. She has no descendants 'and will never have any. Her estate, worth many millions, consists in part of a revocable inter vivos trust created by her in December 1956. Her -annual income for the past five years has substantially exceeded $2,000,000. Her federal taxable income for 1963 is estimated -to exceed' $2,800,000. Her federal and state -income taxes for 1963 iare not expected to exceed $2,000,-000. Expenditures for her maintenance in the five years preceding 1962 averaged $31,000. They were $35,500 for the year 1962, 'and are expected to amount -to that sum in 1963. After the payment of -all taxes and other expenses of the incompetent and the making of 'the gifts as proP'osed, -the -remaining income would be adequate to. maintain Mrs. Kenan in the manner she is accustomed to and in excess of .twice .the sums expended .annually for 'her maintenance for the .preceding five yeans. The bulk o-f Mrs. Kenan\u2019s estate consists of stocks and bonds deposited for safekeeping in. New York. She owns her home in Wilmington and other tangible property located in North Carolina. She (hias bank 'accounts in North Carolina and New York. On the same day in 1955 she executed two related testamentary writings. One, designated her North Carolina will, -disposes of .property located here; the other, designated her New York will, disposes of property located in that -state. Each of the proposed donees meets the -requirement of the particular statute under which petitioner seeks authority to act.\nTlhe gifts proposed \u00a1to ibe made from income total $731,600, from principal, $100,000, .and from the surrender of incompetent's right to receive the income from the 1956 trust created by shea*, approximately $300,000 per annum for her life.\nThe petition 'seeking authority to make gifts from income contains allegations in the language of G.S. 35-29.2(1); .the petition seeking authority ix> malee a gift from principal contains allegations in the language of G.S. 35-29.6(1). The proceeding to surrender the right to revoke the inter vivos trust and make a gift of Mrs. Kenan\u2019s right to receive 'the income for her life not only seeks to. make a gift to' tax-exempt ibene\u00f1ciarieis but would impose a tax liability on Mrs. Kenan\u2019s estate. Petitioner, in 'that proceeding, alleged:\n\u201c(A) That all gift taxes which will -be.incurred by reason of the making of said trust irrevocable .and the making a gift of the 'lifetime interest to charity are properly -payable out of the prin-oiioal assets of the estate of the incompetent .rather than from the \u2022principal 'assets held in said revocable inter' vivas -trust and no part of said gift taxes should be paid out of said revocable inter vivos trust assets; that the long term effect under the present Internal Revenue Code and Rulings would enable the estate of the inooanp'etent to pay substantially leas 'in gift taxes than would be incurred in estate and .inheritance taxes by reason of the assignment of income and declaration of irrevoraibllity because gift .taxes are computed at a lower rate compared .to the maximum rate of estate 'and inheritance taxes and are a credit against any estate \u25a0and inheritance taxes which might be payable with respect to the trust estate and because the 'amount paid on gift taxes will not be subject to' estate or inheritance taxes. In addition, it would save executors\u2019 fees .and commissions on the amount of the gift taxes \u2022and administration costs in .connection therewith and would constitute sound, wise, progressive, needed and essential estate planning in the best interests\u2019of the incompetent -and of those who stand to take this estate upon her death and is within the discretionary authority .of the Court .and'it .is requested by your petitioner that he be permitted to raise sufficient funds for the purpose of paying said gift taxes by selling, or borrowing on the security of, such of the securities as your petitioner shall determine Which are owned by the incompetent and are now held by Morgan Guaranty Trust Company of New York in -custody in New York, New York. That in all probability, the incompetent, if \u25a0competent, would take the necessary steps to accomplish these purposes. To allow the matter to remain in status quo with reference to the trust would serve only to needlessly deplete the estate and would benefit nobody except the executors or administrators of the incompetent\u2019s estate and the taxing authorities.\n\u201c (B) The petitioner respectfully petitions the Court to effectuate this sound estate planning, based on the tax and other economies involved and for the preservation of' the estate of the incompetent which the incompetent would cto for herself if competent, and eliminate what would otherwise be an unjust penalty and treatment of an .incompetent and 'which would not befall a competent person making a sound estate plan.\u201d\nNotice and summons were served on (1) tboise who would take as heirs or distributees if Mrs. Kenan had died Whan, the petitions were filed, (2) those who would take as legatees or devisees under her wills, (3) fihe 'trustees of \u00a1the inter vivos 'trust created in December 1956, and those \u00a1beneficially interested in the trust. Guardians ad litem were appointed for Mrs. Kenan -and minor or other incompetent \u2018beneficiaries.\nMurchison, .guardian ad litem for Mrs. Kenan, \u00a1and Burney, guardian ad litem for minors and unborn parties, by answers challenge the right of \u25a0the trustee to make the .proposed gifts. They allege .the statute? (o. Ill, 112, and 113, S.L. 1963) violate provisions of .the Constitutions of North Carolina and of the United States. Among other constitutional rights asserted to be violated if the gifts are authorized are Art. I, sec. 17 of the Constitution of North Carolina and the Fifth and Fourteenth Amendments of the Constitution of the United States.\nW. R. Kenan, Jr. and A. It. MacMannis, two. of the trustees of the trust created by Mrs. Kenan in 1956, aver they \u00a1seek to faithfully perform the duties Mrs. Kenan imposed on them. Their answer to sec. 15 of the petition filed under* -the provisions of c. 113, S.L. 1963, reads:\n\u201c (A) Answering the allegations of paragraph 15 (A) of the Petition, these respondents admit that no part of the gift taxes should be paid out of the revocable inter vivois trust assets. With regard to toe other allegations of paragraph 15(A), these respondents deny 'any knowledge or information sufficient to form a belief ais to toe truth thereof, except .as to such allegations which may be questions of law, which they are informed and believe that they \u25a0are not required to- answer.\n\u201c(B) These respondents -deny any knowledge or information sufficient to form a belief as to the truth .of allegations of paragraph 15(B) of toe petition.\u201d\nSec. 2 of tibeir further answer reads:\n\u201cThiat your respondents \u00a1are informed and believe that the trust \u25a0agreement dated December 26, 1956, is a validly executed and existing contract for which consideration has passed between the panties. That among other things the .trust agreement provide\u00ae in effect as .follows:\n\u201c (a) Article 1-A. The net income shall be paid to. or .applied for \u25a0the benefit of the donor iso long as \u00a1she shall live.\n\u201c (b) Article 2-A(l). That in the event \u00a1any beneficiary shall be \u2018incompetent,\u2019 that the income payable to' isaid beneficiary may be paid to* the guardian or committee or other legal \u00a1representative wherever appointed of the -said incompetent.\n\u201c (\u00a1c) Article 2-D. That no beneficiary shall have the right to \u00a1dispose of or to assign or transfer .any income from said trust until the same shall be paid or distributed to such beneficiary.\n\u201c (d) Article 5. The donor reserves .the right to -revoke or amend \u25a0this .agreement 'at \u00a1any time .and from time to time by a written instrument other than a will, duly executed \u00a1and acknowledged by her \u00a1and delivered during her life to- \u00a1the trustee .ait the time in office.\n\u201cThat under these \u00a1provisions of the said revocable -trust agreement dated December 26, 1956, it was \u00a1clearly tire intention of the donor that she should receive the net income from said trust so long as \u00e1he should live, and \u00a1that \u00a1in tire event she became incompetent that the said income should be paid to- her guardian \u00a1or duly \u00a1authorized legal representative; that no person entitled to receive income from \u00a1said trust has the \u00a1right to. assign or dispose of the income \u00a1prior to its receipt, and that she \u00a1alone reserved the right to revoke or amend the said trust agreement \u00a1during her lifetime. That the \u00a1effect of the relief requested by the \u00a1petitioner \u00a1in this action would be to rewrite the provisions of the contract to -completely change donor\u2019s intention with respect to- the paragraphs and articles hereinabove referred to, and that tirase respondents are informed and believe \u00a1that the court is without authority to rewrite \u00a1said trust agreement in the respects requested.\u201d\nJudge Mintz, resident judge of the Fifth District, of which New Hanover is a part, presided over the June 1963 Session. The parties stipulated that the proceedings might be consolidated for the purpose .of taking testimony, and waived a jury trial on all factual questions raised by the pleadings, except as to the probability of Mrs. Kenan\u2019s regaining .mental capacity. To determine that question, /the court submitted this issue to a jury: \u201cIs it improbable. that Sarah Graham Kenan, incompetent, will recover competency during her lifetime?\u201d The jury answered in the affirmative.\nJudge Mintz made findings of fact in each proceeding. Except as noted in ithe opinion, these findings are in accord with the allegations \u25a0of the petition'. Based on .the factual findings, \u00a1the court drew legal conclusions and' entered orders authorizing petitioner to make \u00a1the gifts \u00a1as requested except the \u00a1proposed gift of $125,000 to The North Ctaolma Episcopal Church School for Boys, Inc., \u00a1which was not then authorized.\nJohn T.. Manning and Poisson, Marshall, Barnhill -& Williams by Alan A. Marshall for 'petitioner appellee.\nHogue and Hill by C. D. Iiogue, Jr. for A. B. MacMannis and William B. Kenan, Jr., trustees under a revocable tmst agreement dated December 26, 1956, appellants.\nWallace C. Murchison and Louis A. Burney, guardians ad litem, appellants." }, "file_name": "0001-01", "first_page_order": 41, "last_page_order": 57 }